HK’s first poverty index puts 1.3m people in need

A man smokes a cigarette outside a restaurant in Hong Kong on Saturday.

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One-fifth of Hong Kong’s population is living in poverty, underscoring the challenge facing Hong Kong Chief Executive Leung Chun-ying (梁振英) as he seeks to narrow a record wealth gap.

About 1.3 million people, or 19.6 percent of the population, were below the poverty line last year, a report released on Saturday said. The newly established benchmark was set at half of the median household income, excluding tax and welfare transfers, the report said.

The report, commissioned by Leung, may give him the backing needed to ask for more spending and overcome objections to further increase the territory’s minimum wage. Hong Kong increased its minimum wage 7.1 percent to HK$30 (US$3.87) an hour on May 1.

The raise will bolster the salaries of about 327,200 employees, or 10 percent of all workers, according to a report by a government commission before the new ruling.

“The poverty line is a useful reference point for knowing whether the situation is improving or deteriorating,” said Willy Lam (林和立), an adjunct professor of history at the Chinese University of Hong Kong. “The line itself does not solve Hong Kong’s problems. What the government should do is ensure its target of public housing is met.”

Hong Kong’s Gini coefficient, a measure of income inequality in which 1 is total inequality and 0 perfect equality, rose to a record-high 0.537 in 2011 from 0.525 in 2001, the government said last year. The score is above the 0.4 level used by analysts as a gauge of the potential for social unrest.

“To alleviate poverty, the government must promote balanced economic development,” Leung said at a summit on Saturday. “Poverty is not only an issue of the low-income population’s hardship, but it also affects Hong Kong’s harmony and stability, thus affecting its long-term competitiveness.”

Accounting for recurring cash benefits, the number of people living in poverty falls to 1 million, or 15.2 percent of the population, the report said. To lift all of these people up to the poverty line would require HK$14.8 billion, Hong Kong Chief Secretary of Administration Carrie Lam (林鄭月娥) said.

There may not be a lot of support for Hong Kong — a capitalist society and a free economy — to tackle the wealth gap with a more socialist attitude, but the point is to create upward mobility, she said.

Tens of thousands of people protested on July 1 — the anniversary of Hong Kong’s return to China — to demand the government address inequality exacerbated by the doubling of home prices since 2009. Labor unrest and protests have increased in the past two years as inflation and home prices soared.

“Having an official indicator will help the government define its social welfare policies and will also raise public expectations for something to be done,” Chung Kim-wah (鍾劍華), an assistant professor at The Hong Kong Polytechnic University, said on Saturday. “It’ll put a certain pressure on the administration.”

The average gross household income of the poorest 10 percent of the population fell 16 percent to HK$2,170 a month in 2011 from a decade earlier, a government report said. The comparable income for the richest 10 percent jumped 12 percent to HK$137,480 a month during the same period.

Leung raised welfare spending by about one-third in his first budget delivered in February, boosting recurrent spending by 31 percent to HK$56 billion in the fiscal year starting on April 1. He handed out allowances to more than 400,000 elderly residents and pumped HK$2 billion into a poverty alleviation fund.